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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Lee who wrote (153603)	2/11/2000 8:36:00 AM
From: GVTucker	Respond to of 176387

Lee, RE: Why isn't this possible if the growth part of the business, i.e. net servers and services, begin to take a larger portion of overall sales? I guess it is possible, but the fact is that net servers and services took a larger portion of overall sales all year last year, and margins continually dropped.

To: Lee who wrote (153603)	2/11/2000 10:43:00 AM
From: rudedog	Read Replies (2) \| Respond to of 176387

lee - re: Why isn't this possible if the growth part of the business, i.e. net servers and services, begin to take a larger portion of overall sales? Over the last 2 quarters (well really over the last 2 years) DELL has grown their server and storage business VERY strongly - last Q (50+%) at more than twice the rate of the leaders in that space like CPQ (23%) and SUNW (26%)... with the result that they are now #2 in the US and probably #3 World wide. None the less, margins have steadily declined, dropping almost 1 point per quarter. In the future, DELL will have a harder time growing that business - they have already skimmed the cream, and their efforts to go to the next level (the aborted storage initiative with DG, the abandoned in-house services team) don't look like they will bear fruit any time soon. Without some notion of where DELL's server margins are, it's hard to tell what percentage gain would have what margin contribution. But just doing a rough cut, even if DELL continues to grow that business at 50%, which seems unlikely, I can't see how that would do more than shore up the declining desktop margins and allow them to hit 7% or so. 10% seems completely impossible to me - I can't see any combination of events that would do that unless DELL makes some big strategic moves and changes their business. And I did not get the sense that they are considering any moves like that.